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Insurer sues Montana to recoup share of settlement to Libby mine victims

A Nebraska insurance company has filed a lawsuit to recover $16.1 million it paid to help the State of Montana settle asbestos-related death and injury claims by vermiculite miners.


The insurer, National Indemnity Co., claims the payments fell outside its policy with the state, which was in effect from 1973 to 1975. According to the insurer’s complaint, the state knew “there was a substantial risk the State had incurred liability or would be sued on account of injuries suffered from exposure to the alleged dangers and conditions at the Libby Mine.”


In September 2010, a Montana judge approved a $43 million settlement for more than 1,100 victims of asbestos-related illness who worked in a Libby, Mont. vermiculite mine operated by W.R. Grace Co. The plaintiffs, Grace employees and spouses of employees, had argued that state officials knew working at the mine was dangerous, but had failed to issue warnings. Under the agreement, the state paid $26.8 million from the state's reserve fund and National Indemnity paid $16.1 million.


The money was put into a trust that was not named in the insurer’s complaint. Bill Gianoulias, chief legal counsel for the Montana Department of Administration, told the Associated Press that the state’s dispute with National Indemnity will not reduce or delay payments to victims. The Center for Asbestos Related Diseases clinic in Libby has a caseload of about 2,800 victims and has continued to add new patients.


"I don't think this has any effect on the trust," Gianoulias said.


An estimated 400 people have died and thousands more were injured due to exposure to asbestos from the Libby mine, which shut down in 1990 and was later declared a Superfund site. The U.S. Environmental Protection Agency has spent $370 million since 1999 to clean up Libby and the nearby town of Troy.


According to the insurer’s complaint, National Indemnity had accepted the state’s defense against the victim’s lawsuits, but reserved the right to seek reimbursement of fees and costs “if it is determined National Indemnity in fact does not owe a defense to the State of Montana against the Libby Mine Claims. . .”


The company says the state did not properly notify the insurer of the lawsuits, and that the state hired outside counsel to fight the claims without the insurer’s knowledge.


"National and the state have ongoing disputes about the parties' respective rights and obligations" under the terms of the policy, the lawsuits said.